Circle CEO Jeremy Allaire says the U.S. lagging behind China’s development of a national digital currency could alter the way Western companies transfer payments.

Speaking on the Global Coin Research podcast this week, Allaire said China is setting the pace in the development of a digital currency equivalent of its fiat currency, the renminbi, and could soon bypass Western rules through direct settlements. Allaire also said Circle continues to be interested in the development of stablecoins, such as its USD Coin.

“[Circle] also believes that the major reserve currencies of the world, the major trade currencies of the world, would become digital currencies,” Allaire said.

“A digital currency version of renminbi that runs on software platforms that can be run over the internet, it really creates an opportunity for China and Chinese companies . . . and bypass the western banking system.”

Earlier this month, the People’s Bank of China announced it was wrapping up a year-long digital currency project.

Allaire said Circle, which launched a U.S. dollar stablecoin in 2018, is keeping its eye on China’s development. A digital renminbi, Allaire said, makes sense in view of the larger global financial picture:

“I think the broader concept of the internationalization of the yuan and the belt and road initiative and the desire to expand China role as a trade counterparty . . . digital currency is a natural path for that to grow.”